Finding Text
Information on the Federal Program: Assistance Listing Number 47.050—Geosciences, National Science Foundation. Award Number: 224242, 2303562, 2243827, 2246223, 2246225. Compliance Requirements: Cash Management Type of Finding: Material Noncompliance and Significant Deficiency.
Criteria: Under 2 CFR § 200.305 - The recipient or subrecipient may retain up to $500 per year of interest earned on Federal funds to use for administrative expenses of the recipient or subrecipient. Any additional interest earned on Federal funds must be returned annually to the Department of Health and Human ServicesPayment Management System (PMS). All interest in excess of $500 per year must be returned to PMS regardless of whether the recipient or subrecipient was paid through PMS.
Condition: For the year ended March 31, 2024, Future Earth did not comply with the requirement to minimize the time between the drawdown of federal funds and their disbursement. This resulted in interest accumulation on these advance payments. Future Earth failed to remit interest earned in excess of $500 annually to the PMS as stipulated by the regulations.
Cause: This was the second year Future Earth was awarded Federal funding and was unaware of this requirement.
Effect: Financial liabilities due to unremitted interest, subjecting the entity to potential penalties and repayment obligations.
Questioned Costs: We were not able to determine the amount of interest earned on federal funds held during the year ended March 31, 2024.
Context: In our review of the 4 grant draws occurring during the year, we noted that in 3 of 4 draw requests, funds were requested before expenditures. In 1 of the 4 draws, we noted that funds were drawn on September 8, 2023 were not yet expended as of March 31, 2024. Interest earned on these funds was in excess of $500, but was not tracked or remitted to the grantor. No controls were identified to ensure interest was tracked and remitted as required by the regulations.
Recommendation: We recommend that Future Earth establish a policy to minimize the time between draw and expenditure. We would also recommend that any federal funds received in advance of expenditure be segregated into a separate bank account in order to better track any interest earned on federal funding.
Views of Responsible Official: Management agrees with this finding. Please see corrective action plan at the end of this report.